After decades of fighting, Delta farmers and south San Joaquin Valley water interests have agreed to settle a lawsuit over a plan to convert two farm islands into reservoirs.

And at their meeting Tuesday, San Joaquin County supervisors are expected to consider their own settlement, potentially ending litigation over what is known as the Delta Wetlands Project.

A judge had already rejected opponents' complaints in court, but appeals were still pending.

The agreements may not be an absolute green light for the project to move forward - there is at least one obstacle still to overcome - but they do indicate a shift toward compromise following a quarter-century of conflict.

"Our concerns have been addressed," said Dante Nomellini, an attorney for central Delta farmers who challenged Delta Wetlands in court. "We're OK with the project, and we've addressed our issues across the board."

Not to be confused with Gov. Jerry Brown's highly publicized twin tunnels plan, the lesser-known Delta Wetlands Project would convert Bacon and Webb islands west of Stockton into open-water reservoirs. In wet years, some of the water held in those bowl-like islands could be pumped south from the Delta to Kern County and stored underground for use by cities and farms during dry years.

Two more Delta islands, Bouldin and Holland, would be used for farming and wildlife habitat.

But Delta farmers were concerned that neighboring islands could be harmed by the project. They had argued that flooding the two islands would create more water pressure and wave action on other levees, increasing the risk of flooding other islands.

The complex settlement involving the Delta farmers puts safeguards in place to prevent that. The reservoir islands must be filled slowly, in 25 percent increments, while instruments detect for possible leaks on neighboring islands.

The settlement also requires establishment of a $35 million fund that could be used to repair damage to neighboring islands, among other things.

Delta Wetlands officials have said the water will be taken only during wet years and will not affect other water users in the Delta.

"It might help us," Nomellini said. "If they want to keep good water quality in the reservoir, that means they keep good water quality in the channels" from which Delta farmers draw irrigation water.

According to a staff report accompanying the county's proposed settlement, Delta Wetlands also agreed to make up for the thousands of acres of farmland taken out of production on the flooded islands by obtaining easements to preserve 5,500 acres of farms elsewhere in the county. Delta Wetlands also agreed to go through the county's permitting process.

In exchange for all this, the farmers and the county remove their opposition to the project.

Delta Wetlands spokesman Dave Forkel declined to answer questions about the next steps for the project, now that the litigation appears to have been resolved. He did say project proponents have "worked hard to address the concerns of San Joaquin County and Central Delta Water Agency and appreciate their good-faith efforts."

The project is a public-private partnership between the Semitropic Water Storage District in Kern County and Walnut Creek-based Delta Wetlands Properties, which owns the islands.

At least one obstacle remains: An environmental group has protested Delta Wetlands' request for the right to take the water, arguing that California water supplies already are overpromised and the impact on fish and wildlife is uncertain.

"We're delighted that Central Delta and the county were able to resolve their concerns, but we're not yet convinced," said Bill Jennings, director of Stockton-based California Sportfishing Protection Alliance.